Cerner Stock Set for Double-Digit Breakout

Cerner Corporation (CERN), a health care information technology solutions company, is poised for a double-digit move in the coming weeks. Its price chart shows that the stock has been consolidating for a few months now, creating an ascending triangle pattern.

That’s where our expectations of a double-digit breakout come from. With clear support and resistance levels, we’ll know the moment the stock is breaking out of this consolidation. And when it does, the stock is set for a 10% pop or drop, depending on where the breakout occurs.

Here’s the triangle pattern on Cerner’s price chart:

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The ascending triangle has a horizontal resistance level, in red, which is sitting right at $74 per share. The support level, in green, is a rising trendlinehighlighting the short-term uptrend for the stock.

Now we just need a breakout. Triangle patterns are great because, once a breakout occurs, the expected move is simply the height of the pattern. In the chart pattern above, it’s $10 per share, or 13.8% of the stock’s current price. That’s where we get our $84 upside price target and $60 downside price target.

One last note: most ascending triangle patterns are continuation patterns. The only problem is that, when you look at the chart above, it’s not clear what the continuation of the trend implies. The stock peaked and then bottomed out before creating the triangle pattern. And before that, the stock has basically traded sideways, between $50 per share and $75 per share, for five years.

So there’s no clear trend to play the continuation. It’s best to wait for the breakout to occur and then play the trend.

The Bottom Line

Cerner stock has been stuck in an ascending triangle pattern for months now, but a breakout is becoming more imminent. Based on the price pattern, Cerner shares are set for a quick double-digit move once the breakout occurs.

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